Today, the Show-Me Institute released a new essay, “Cutting the Ties That Bind: End Missouri’s Corporate Income Tax,” which yours truly and my colleague Patrick Ishmael wrote. The paper proposes eliminating the state’s corporate income tax and capping or eliminating economic development tax credits in order to ensure no losses to state revenue. This will help Missouri be more attractive to businesses because it will get rid of a destructive tax without forcing cuts to services. Give it a look.
Show-Me Discusses the Medicaid Expansion With Media All Across State
It has been a busy few days in the Show-Me office. Yesterday, Missouri Gov. Jay Nixon announced that his upcoming fiscal year 2014 budget includes an expansion of the state’s Medicaid program, a move that, if adopted, would take the state a step closer to full of implementation the Affordable Care Act, or “ObamaCare.” Below are the FOX2/KPLR11 and NBC’s Newschannel 5 (KSDK) Medicaid stories for which I was interviewed. Interviews also aired on KMOX in Saint Louis and Columbia’s The Eagle radio station this morning; if made available online, I will post those here. I am also scheduled to appear on KMOX Monday afternoon and KCMO radio Tuesday morning, so if I can get my hands on those segments, I will post them next week.
And Over In The House
I previously blogged about the Missouri Senate’s stated agenda for the upcoming legislative session that starts in January. Over in the House, Speaker Tim Jones (R-Saint Louis County) plans to focus on business interests. Speaker Jones has stated, “Whether that means cutting taxes or implementing incentives, we’re going to have everything on the table and we’re going to do what’s best for Missouri businesses, while we protect our Missouri taxpayers.” While that sounds encouraging, I do have a few words of caution.
First, being pro-business is not the same as being pro-free market. Being pro-business can devolve into being pro-some businesses and anti-other businesses. For example, my colleague Kacie Galbraith wrote about the Columbia Regional Airport and the various incentive schemes city officials are cooking up to entice American Airlines to offer service there, at the expense of Delta. The proper response would have been lowering costs and burdens for ALL airlines and letting the free market determine which, if any airlines, might serve the Columbia region.
The Speaker has assured the taxpayers that there will not be anything like “Aerotropolis” coming down the pipe. That is great to hear. Yet, when Speaker Jones talks about “implementing incentives,” I get nervous. The biggest incentive for businesses to locate in Missouri would be a favorable environment for ALL businesses. The incentives that legislators talk about usually mean a new tax subsidy, taking money from one group of people and giving it to another.
I hope the House moves in the tax cut direction and away from the business incentive direction. I have blogged (a lot) about the benefits of eliminating the corporate income tax and the taxes on pass-through entities. As I mentioned before, the Senate seems disposed to pass some sort of income tax cut. If the House follows suit, it is possible to enact some meaningful reform.
TIF Menace Growing in Missouri
Like monsters in a horror film, Tax Increment Financing (TIF) districts keep coming back larger and more rapacious. Officials in Columbia and Joplin are now both considering huge TIF districts that will encompass major parts of their cities. (I wrote about Joplin’s TIF here, and we can all admit this is a different circumstance than most TIF plans in Missouri.)
The Columbia plan is thrilling to me in that its supporters do not even bother trying to couch their intentions. TIF was passed originally as a way to revive blighted communities. But, from the beginning, it was used to subsidize retail establishments. Now, in Columbia, they are basically admitting it is a tool of progressive urban planning; using other people’s (and other government’s) money to get what they want. Doubt me? Take this letter in support of a new TIF district (scroll to end) in Columbia from Rosalie Gerding with the Downtown Leadership Council:
Developers who come forward with plans that will accomplish the designs proposed in the report could be encouraged to apply for TIF funds.
Here, TIF is blatantly proposed as a carrot for urban planning, not a way to revitalize a depressed area. Of course, because downtown Columbia is not the least bit depressed, that makes sense in a weird way. Like being wrong by 359 degrees almost makes you right.
There are more unsettling aspects to this plan. Eminent domain abuse goes hand-in-hand with TIF, so it should be frightening for Columbia residents to read this line from the letter (emphasis added):
Without incentives in place, we continue to run the risk that projects we don’t necessarily want will go up in the very spots that we have targeted for higher-use development.
My translation, “We need to use other people’s money to subsidize our friends’ developments because we can’t allow the free market to determine what happens in downtown Columbia.”
The plan that the Columbia City Council accepted last week (see p. 35) clearly states they want to turn all of downtown into a huge TIF district. (To be fair, they just accepted the plan, they did not pass the TIF.) I continue to find it amazing that a great city like Columbia wants to imitate the failed examples of Kansas City and Saint Louis by passing more and more TIFs and other subsidies (EEZs) to encourage things that have been happening without subsidies. Then again, maybe the market forces were making plans that the “urban planners” did not like, and Lord knows you cannot allow that to happen.
I cannot commend Boone County Assessor Tom Schauwecker enough for his continued fight on this issue.
Education Saving Accounts: What Are They?
On Sunday, the Columbia Daily Tribune published an op-ed I penned and I would like to expand here on one of the ideas I discussed in the piece: Education Savings Accounts (ESAs)
Much like a health savings account, an ESA would be a savings account used solely for education purposes. The state would deposit money into these accounts; families would then be the owners of these accounts and could use the money to purchase school supplies, tutoring services, or even private school tuition. Money not spent could be saved for later use, including college tuition. Writing for the Friedman Foundation, Matthew Ladner calls ESAs the way of the future and a “critical refinement” of Milton Friedman’s idea of the school voucher.
In 2011, Arizona became the first state to pass ESAs into law and the accounts seem to be growing in popularity. Initially, Arizona’s ESAs were available for students with special needs, but a 2012 expansion of the program will allow students in failing schools, students adopted from the state’s foster care system, and children of active-duty military families to take part in the program. Goldwater Institute Education Director Jonathan Butcher writes, “Now, nearly one out of every five Arizona public school students — more than 200,000 children . . . are eligible for an account. . . . The accounts are a model for what education in the 21st century should look like: flexible, innovative, and child-centered.”
Missouri school districts spent an average of $9,619 per student in 2011. The state’s share of this is approximately $2,800. In lieu of sending that money to school districts, families with eligible students could receive an ESA worth $2,000 for educational expenses. This would give families more options while saving the state and local school districts money. In the next legislative session, Missouri policymakers should seriously consider ESAs in any discussion of school funding.
Show-Me On The Radio Tomorrow
I will be talking with Chad and Josh on the Morning Newswatch on Joplin’s KZRG 102.9 FM at 7:10 a.m. tomorrow morning. We will be discussing the Joplin Tax Increment Financing (TIF) proposals. Please listen in if you can.
I will also have my regular weekly appearance with Manny Haley on the Morning Magazine on KRMS Lake Ozarks 97.1 FM at 10:15 a.m. We are discussing the Dierbergs Transportation Development District (TDD). Join us for Show-Me at the Lake.
VIDEO: Bieber Fans Want Freedom
Have you heard about Ticketmaster’s new “paperless ticketing” for events? I talked to Justin Bieber fans to find out how they would feel about the switch to restrictive ticketing.
My previous post prompted some questions about whether I support government action to prevent paperless ticketing. I do not think the government needs to get involved here. However, I do believe event-goers should have a voice in the matter. (Watch the video to learn more about the issue.)
Ticketmaster, as I am sure everyone knows, is practically a monopoly. Because of their strong market power and lack of competition, Ticketmaster has freedom to enact unpopular policies. They are able to do this without suffering a huge loss in business because fans do not have the option to buy tickets from a different company. It is like Ticketmaster is saying, “My way or the highway, fools!”
But that is not what fans want. They want choice, and they do not want to be told what to do with their tickets once they buy them. There is value in customers telling companies what they want, not the other way around. Watch the video to see what Bieber fans have to say (the kids were so cute with their posters and costumes).
Paperless Ticketing: Are You a Belieber?
Ticketmaster is proposing paperless ticketing technology that would limit the freedom of fans to buy, sell, and give away tickets to concerts and other events. Show-Me Institute Research Assistant Kacie Galbraith stopped by the recent Justin Bieber concert in Saint Louis to ask fans what they think of the change.
An Agenda That Makes Sense
Major changes to the tax code appear to be top priority on the agenda for the 2013 session of the Missouri Senate. According to one report, Sen. Tom Dempsey (R-Saint Charles), who is expected to be elected as the presiding officer of the Senate when it convenes, was quoted as saying the Senate will move quickly to provide “income tax relief.” Specifics have yet to be finalized, but corporate and small business (i.e. pass-through entities) tax cuts are on the table. Another objective for the Senate is overhauling the state’s tax credit programs.
The above items are worthy goals. Patrick Ishmael and I have pointed out the benefits of business tax reform. It would be great if the state capped and/or eliminated certain tax credit programs such as the Quality Jobs program and used the extra revenue to eliminate the state’s corporate income tax. We have also pointed out the strategic necessity of following other states’ leads and eliminating the tax on pass-through entities such as LLCs.
I hope that the Senate can follow through on these stated objectives and help enact some meaningful changes in the tax code. Legislating is not easy, but the opportunity is present for legislators to accomplish a lot.
